Correlation Between Catalent and Nova Vision

Can any of the company-specific risk be diversified away by investing in both Catalent and Nova Vision at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Catalent and Nova Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catalent and Nova Vision Acquisition, you can compare the effects of market volatilities on Catalent and Nova Vision and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Catalent with a short position of Nova Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Nova Vision.

Diversification Opportunities for Catalent and Nova Vision

0.03

Correlation Coefficient

Catalent  Nova Vision

Significant diversification

The 3 months correlation between Catalent and Nova is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Nova Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Vision Acquisition and Catalent is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Catalent are associated (or correlated) with Nova Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Vision Acquisition has no effect on the direction of Catalent i.e., Catalent and Nova Vision go up and down completely randomly.

Pair Corralation between Catalent and Nova Vision

If you would invest  6,305  in Catalent on October 13, 2024 and sell it today you would earn a total of  43.00  from holding Catalent or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

Catalent  vs.  Nova Vision Acquisition

Catalent

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nova Vision Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Vision Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nova Vision is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Catalent and Nova Vision

The main advantage of trading using opposite Catalent and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Nova Vision can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nova Vision will offset losses from the drop in Nova Vision's long position.

The idea behind Catalent and Nova Vision Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.